The World currencies stabilized on Monday given the imminence of the decisions of the central banks of Japan and Europe and the wavering expectations of the markets regarding the rate cuts of the US Federal Reserve (FED), which forced a pause in the rally of the dollar driven by the data of this anus.
He dollar index falls 0.10% this Monday to 103 pointsalthough it is the developed market currency that rose the most in January: it appreciated 1.8% since the beginning of the year, although its rebound has been uneven, as investors try to decide when the Federal Reserve will begin to cut rates of interest.
He japanese yen It was one of those that moved the most this Monday, January 22, moving away from 148.80 on Friday, its lowest level in a month, to stand at 147.74, as the Bank of Japan began its two-day monetary policy meeting. Bets on an exit from negative rates at this meeting have been reduced following the New Year’s Day earthquake off Japan’s west coast, along with bearish comments from the Bank of Japan.
The Japanese currency, sensitive to The difference in interest rates between the United States and Japan has been the most affected against the dollar this yearwith a drop of around 5%, which represents a rapid decline compared to the rebound in December, when it reached five-month highs close to 140 points.
The dynamics that analysts see
“The history of policy convergence made The dollar and yen fell late last year, and after the New Year we saw some pullback because market expectations of Fed rate cuts have been delayed a bit and expectations of a Bank of Japan rate hike have also been delayed,” said Shusuke Yamada, chief Japan rates and currencies strategist at BofA.
“Tomorrow we have the BOJ, and I think the market wants to see the result before doing anything” he said, adding that he did not expect “anything major from the BOJ tomorrow.”
The operators indicated that One of the factors driving the yen’s movements was the expiry of a large number of currency options this week and the coverage around those contracts.
The yen and the euro
LSEG data showed that although most of the options expiring between Monday and Thursday with strike prices between $147.15 and $148.10 were small, the cumulative amount was around $2.6 billion.
He The euro was down 0.1% at $1.0888 and the pound was up a fraction at $1.27095. The dollar-weighted index stood at 103.24, unchanged on the day.
Interest rate futures show traders are betting on rate cuts to begin in May, not March as until last week. Longer-dated Treasury yields have risen steadily, with the 10-year yield rising 30 basis points this month.
However, there is a large difference of about 100 basis points between market expectations and the Federal Reserve’s own dot plot of the rate situation at the end of the year.
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